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Gold is behaving more like a meme stock than a haven asset, Bill Gross told Business Insider.
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Having surged this year, the precious metal suffered its worst single-day drop in 12 years Tuesday.
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The billionaire “Bond King” said it was “exhibiting characteristics of meme and momentum stocks.”
Gold is trading more like a trending stock on Reddit than a haven for investors, and may have topped out after its record surge, billionaire investor Bill Gross told Business Insider.
The yellow metal fell as much as 6.3% on Tuesday, suffering its worst drop in 12 years. The drop coincided with an even steeper 8.7% decline in spot silver prices.
The moves suggest investors are taking profits after gold and silver’s record-setting gains this year, and perhaps acting on Gross’s latest warning.
After cautioning investors in a Friday post on X to “wait awhile” if they wanted to buy gold, the Wall Street billionaire known as the “Bond King” told Business Insider in an email that gold was “exhibiting characteristics of meme and momentum stocks.”
Gross, who cofounded PIMCO and grew its flagship Total Return Fund to $270 billion over nearly three decades, meant that gold has soared in price partly because of hype and speculation, making it more volatile and vulnerable to a sudden, sharp decline.
Gross told Business Insider that gold was still “sensitive to short-term interest rates,” referring to the metal’s tendency to rise in price when borrowing costs drop.
That’s because falling rates make gold more appealing to investors relative to cash and bonds as their yields decline. Lower rates can also accelerate inflation, making gold a more attractive hedge against rising prices, and signal economic trouble, feeding demand for gold as a safe investment.
Gold has also soared this year because central banks have been buying historically large amounts of it due to “policy uncertainty,” Gross said. Trade wars, military conflicts, and political discord have fueled doubts about the outlook for markets and the global economy.
Gross told Business Insider that gold would likely “hold up better than stocks” in the weeks ahead, adding that a disappointing earnings season could rein in the bull market. But he said there might be a price pullback after two strong months of trading, creating “perhaps a better time to buy.”
The veteran investor said “momentum, policy, and perhaps interest rates will be dominant factors” in gold’s price trajectory.
